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DECISION No. 486/2003/QD-NHNN OF MAY 19, 2003 PROMULGATING THE REGULATION ON INTERNAL CONTROL AND INTERNAL AUDIT OF THE STATE BANK

THE STATE BANK GOVERNOR

Pursuant to Vietnam State Bank Law No. 01/1997/QH10 of December 12, 1997;

Pursuant to the Government’s Decree No. 86/2002/ND-CP of November 5, 2002 defining the functions, tasks, powers and organizational structures of the ministries and ministerial-level agencies;

At the proposal of the director of the General Control Department,

DECIDES:

Article 1.- To promulgate together with this Decision the Regulation on internal control and internal audit of the State Bank.

Article 2.- This Decision takes effect 15 days after its publication in the Official Gazette and replaces Decision No. 93/1999/QD-NHNN4 of March 20, 1999 promulgating the Regulation on internal control and audit of the State Bank.

Article 3.- The director of the Office, the director of the General Control Department, the heads of the units of the State Bank and the directors of the State Bank’s branches in the provinces and centrally-run cities shall have to implement this Decision.

Governor of the State Bank
LE DUC THUY

REGULATION ON INTERNAL CONTROL AND INTERNAL AUDIT OF THE STATE BANK

(Promulgated together with Decision No. 486/2003/QD-NHNN of May 19, 2003 of the State Bank Governor)

Chapter I

GENERAL PROVISIONS

Article 1.- Scope and subjects of application

This Regulation prescribes the organization of the work of internal control and internal audit in the State Bank’s system.

Article 2.- In this Regulation, the following phrases and terms are construed as follows:

1. Units mean departments, transaction offices, branches, non-business units and representative offices of the State Bank.

2. Internal control of the State Bank (called the internal control for short) means the inspection of work performance by each individual or unit, conducted by specialized control individuals or sections in units, in order to ensure the asset safety and efficient realization of the objectives set by each unit.

3. Internal audit of the State Bank (called the internal audit for short) means the independent study and assessment of the adequacy and efficiency of the internal control system; the truthfulness, accuracy and adequacy of information in financial statements or professional reports of the State Bank as well as the quality of assigned-task performance by units.

4. Double-control principle means a requirement in the task assignment at units that a work should be performed and inspected by at least two persons, thus ensuring the asset safety and work efficiency.

Article 3.- Objectives of the internal control and internal audit

1. To ensure the units’ compliance with the undertakings, policies and laws of the State, professional regulations and procedures of the State Bank, prevent violations of, or non-compliance with, laws and professional processes, which may lead to operation risks.

2. To ensure that each unit operate in line with the set orientations and its measures for organizing the task performance be effective and efficient.

3. To identify and assess the accuracy, adequacy and rationality of information in the units’ financial statements and professional reports.

4. To protect the asset safety and prestige of the State Bank.

5. To propose the State Bank Governor to amend and/or supplement the existing mechanisms and regulations or promulgate new ones in order to enhance measures to ensure the asset safety and raise operation efficiency.

Chapter II

INTERNAL CONTROL

Article 4.- Internal control must be regularly and constantly organized and conducted in each work of individuals, sections, divisions and leading officials at each unit.

Article 5.- Heads of units shall base themselves on the assigned functions and tasks to organize fully and efficiently internal control, and be answerable to the Governor for the quality of internal control activities at their respective units.

Article 6.- Contents of internal control activities

1. Promulgating working regulations applicable to unit leaders, specifying the powers and responsibilities of each leading official in the administration and handling of works. Unit heads shall authorize and assign responsibilities for maintaining the internal control work to each section or division in their units, with a view to comprehensively controlling their units’ operations.

2. Regularly, promptly and adequately disseminating the State’s regime documents on banking activities, the State Bank’s mechanisms, professional regulations and processes to all officials and employees in units.

3. Assigning tasks and responsibilities to sections, divisions and individuals in units on the double-control principle, thus ensuring that all works are performed and double-checked. Each individual or section shall have to exert self-control and take self-responsibility for the assigned works, ensuring work efficiency and compliance with law, professional regulations and processes.

4. Unit leaders of each level must assess the risk degree of each professional operation in order to put forward appropriate control measures: supervision, pre-control, post-control, extraordinary control.

5. Specifically prescribing the internal information and reporting regime, democratic regime and financial transparency regime in units.

Article 7.- Internal control sections (in units having organized their own internal control sections or divisions) shall be subject to the direct management by unit heads, assist unit heads in organizing and conducting the internal control in all operating domains of the units, and submit to the direct instruction by the General Control Department in terms of control processes and methods.

Article 8.- Units heads shall have to create conditions for controllers in their units to play a relatively independent role in performing their control tasks.

Chapter III

INTERNAL AUDIT

Article 9.- The General Control Department shall conduct the internal audit of the units attached to the State Bank, and be answerable to the Governor for its conclusions and proposals stated in internal audit reports.

Article 10.- Internal audit principles

1. Complying with laws, professional regulations and processes as well as audit contents and programs already approved by the State Bank Governor.

2. Ensuring the independence, truthfulness, objectivity and confidentiality of State secrets and secrets of audited units.

3. Not obstructing the operations and interferring in the administration activities of audited units.

Article 11.- Internal audit scope

1. Auditing of financial statements of the State Bank.

2. Auditing of units’ compliance.

3. Auditing of operations, assessment of performance of tasks by units, with a view to attaining the general objectives of the State Bank.

Article 12.- Financial statement audit

Financial statement audit means that the State Bank’s controllers independently examine and assess the State Bank’s financial statements and information relevant thereto in order to certify their accuracy, truthfulness, adequacy, rationality and conformity with the current accounting and cost-accounting, financial management and capital construction principles and regimes of the State and the State Bank.

Article 13.- Compliance audit

Compliance audit means that the State Bank’s controllers base themselves on the current regulations of the State and the State Bank as well as the units’ implementation situation to examine and assess the audited units’ compliance with laws, regulations, mechanisms and professional processes in order to detect violations of regulations, wrongdoings in the administration and management, and preclude risks in banking activities.

Article 14.- Operation audit

Operation audit means that the State Bank’s controllers base themselves on dossiers and documents to independently examine and assess the task performance by an unit in the organization, management, administration and use of resources and administrative as well as techno-professional measures to attain the objectives, and on that basis to assess the effectiveness and efficiency of such units’ operations.

Article 15.- Responsibilities and powers of heads of internal audit delegations

1. Audit delegations’ heads shall have to direct and administer common works of their delegations, thus ensuring the fulfillment of audit plans.

2. To request the audited units and concerned units to supply dossiers, documents and information within the scope of the audit drive.

3. To promptly settle problems in relation with the audited units in the auditing course within the ambit of their competence, and to immediately report serious matters to the leadership of the General Control Department.

4. To sum up and make audit reports and adopt them at the audited units; to be answerable to the Governor and the director of the General Control Department for audit conclusions of their delegations; to gather and keep audit dossiers.

Article 16.- Responsibilities and powers of units subject to internal audit

1. To abide by internal audit decisions.

2. To supply adequate information, dossiers, documents and means in service of internal audit.

3. To bear responsibility for the truthfulness, completeness and accuracy of all documents supplied to internal audit delegations.

4. To be entitled to explain and report to the audit delegations on the latter’s conclusions or reserve and submit their opinions to the competent authorities in cases where they disagree with the audit delegations.

5. To organize the realization of proposals, and report in writing on the realization of conclusions and proposals of the audit delegations to the Governor through the General Control Department.

Article 17.- Responsibilities and powers of the director of the General Control Department of the State Bank

1. To promulgate or submit to the Governor for promulgation processes of internal audit of the State Bank.

2. To work out and submit internal audit programs and plans to the State Bank Governor for approval.

3. To be authorized by the State Bank Governor to sign decisions on setting up internal audit delegations under the plans already approved by the Governor, except for audit delegations at the departments of the Central Bank.

4. To perform other tasks prescribed in the Regulation on organization and operation of the General Control Department.

Chapter IV

IMPLEMENTATION PROVISIONS

Article 18.- The director of the General Control Department of the State Bank shall guide in detail the implementation of this Regulation.

Article 19.- The amendments and/or supplements to this Regulation shall be decided by the State Bank Governor.

State Bank Governor
LE DUC THUY